Rethink the Way Information Moves Inside the Company

Gates has been one of the main drivers of the technology revolution. Nevertheless, he has made some fundamental miscalculations about that revolution. For example, at first Gates was not a believer in the Internet, although he later came to view it as a powerful tool that would transform the very nature of work and commerce. As he explained in 1999,

It will allow people to collaborate across the globe. ... It goes beyond just the idea of electronic commerce. It speaks to the very fundamental idea of how information moves both inside a company and between a company and its partners and customers.

Gates views the Web as an information-sharing tool that can help to turn every employee into a knowledge worker. Some people believe that the largest changes caused by technology are behind us. Gates is not one of them. In the summer of 2002, he spoke of an upcoming "digital decade," because, he believes, the tools that will be created during the next 10 years will be the "best tools for empowerment and productivity the world has ever seen."

He explained how technology has influenced productivity:

The impact on productivity has been pretty phenomenal. If you just simply take the idea of Web browsing, e-mail, and the productivity software that's being used ... that has had a very big impact. People like Alan Greenspan and others are looking at these numbers and saying it really is a fundamental change and far better than they would have expected going into those boom years.

As a result, Gates often speaks about a culture that encourages the entire workforce not only to think, but also to share their thoughts with coworkers and managers up and down the company hierarchy. In his book Business @ the Speed of Thought, the Microsoft founder used the phrase "digital nervous system" as a metaphor for information sharing within an organization.

He also comments frequently on the need for management to reevaluate its orientation toward information and on how making information readily available can help to fuel productivity:

The analogy to the value chain is a good one. Every worker, in a sense, is trying to add value, but your way of getting information to those workers—at meetings or via paper memos—we've taken as a given. Now that you can instantly provide all this information to these workers inside and outside your company, you get to rethink the way everything works.

Gates coined the phrase "digital nervous system" because he sees the role of digital information as analogous to the role of the central nervous system in the human body. One of the primary benefits of a digital nervous system is that it synthesizes the collective intelligence of an organization. This comprises not only "big-picture" issues such as strategic planning, but also such mundane (but critical) activities such as interactions with customers. He also sees the Internet and the technology surrounding it as a way to better match buyers and sellers, which (as he argued in late 2000) was almost certainly what Adam Smith and his fellow inventors of capitalism had in mind in the first place:

Part of this process involves changing the way we buy and sell. A good reference point is to go back to Adam Smith. ... He talked about the matching of buyers and sellers as being the fundamental mechanism of capitalism.

Ultimately, a digital nervous system is about creating a faster, more decisive organization. Those companies that are better able to incorporate all of their information into an integrated system, and make all that knowledge accessible to all employees, are the ones that will have the fastest reflexes, and will react most quickly to the lightning-paced changes in the marketplace.

In order to create an organization closer to Gates's ideal, consider taking the following step (if your organization has not done so already):

DIGITIZE THE COMPANY'S MOST VITAL INFORMATION. As the rest of this chapter will underscore, it is impossible to create a true digital nervous system unless the company's most important information is made available in a digital format. Make sure that key sales reports, memos, initiatives, and so on are available online. Also make sure that they are readily accessible to all the employees and managers who need them.